The eight years of the Modi government is work in progress, not work completed. The broad reform agenda sets the template for India in the next 25 years, for 2047 or 2050
Prime Minister Narendra Modi departs for Delhi after attending a productive Quad Summit with Australia, Japan, and USA. Twitter/ @MEAIndia
The Narendra Modi government in Delhi (there was an earlier stint in Gujarat) came into being in May 2014. There is continuity between the first term, from 2014 to 2019, and the present term, extending till 2024. There is continuity in policies too. A book has just been published on 20 years of Narendra Modi, including the Gujarat stint. Articles are now being written on eight years of Modi as prime minister, or two-and-a-half years of the second term. The second term suffered from the exogenous shock of COVID-19. It is the job of critics to carp.
Whatever be the critique, under any metric, and subject to health being on the State List, India’s COVID-19 management was remarkable. So-called advanced countries fared far worse. As soon as India and the economy started to recover from the pandemic, global tensions set in and they have not yet sorted themselves out. Given these tensions, the worst of carping critics will have to admit India handled foreign policy deftly. In May 2014, there was a profusion of Cassandras. There would be chaos. Clashes would divide the country. Editorials and op-ed commentators may have had their wish lists, but nothing of the sort has happened. On both external and domestic security and law and order, there has been nothing major, despite provocations.
Why has India fared relatively well during the pandemic? One reason is the Modi government’s emphasis on providing basic necessities, a range of them — food, water, sanitation, education, skills, housing, bank accounts and financial products, electricity, gas connections, housing, and transport connectivity. In a country like India, the government cannot afford to abdicate, contrary to the advice of those who advocate a complete reliance on the market. The benign role of government cannot wither away. Admittedly, this is work in progress. We are only halfway through the second term, the second term also having suffered from shocks.
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Admittedly, implementation is contingent on how states react. Admittedly, governance is also a function of legislature and judiciary. Admittedly, every scheme has not been perfectly implemented and government dashboards over-state success. However, external assessments also establish that while the glass may not be completely full, it has been filled quite a bit. The aspirational districts programme is a case in point. This has been spliced with the targetting of subsidies, using SECC, and DBT, by linking with bank accounts and Aadhaar, facilitated by the use of information technology and reduction of human interfaces. We tend to forget the consequent reduction in leakages and petty corruption. This reinterpretation of inclusion is a major mindset change over the last seven decades. If people are empowered, they do not need doles. Why should something like MGNREGA be necessary?
Just as there is a benign role of government, where the government cannot afford to abdicate, there is also a malign role of government, where the government does need to abdicate and reduce unwarranted intervention. A column like this isn’t meant to list out various schemes to provide basic necessities. In the same way, a column like this cannot list out all government initiatives to curb excessive intervention and improve both ease of living and ease of doing business.
Enhancing the benign and reducing the malign are two sides of the same coin. That is the reason why the Narendra Modi government shouldn’t be straitjacketed through “isms” or market versus the State. As part of this, there has been a cleaning up of the system. GST, RERA, disincentivising cash transactions, scrutiny of tax evasion, curbing down on shell companies and benami properties, anti-money laundering initiatives, even the insolvency code, are part of this cleaning up process. In the long run, cleaning up enhances efficiency. In the short run, it can lead to resentment and even have adverse effects on growth.
Growth is a function of productivity of labour, land and capital and requires efficient land, labour and capital markets. Land is squarely in the State List of the Seventh Schedule and labour is in the Concurrent List. That’s the reason such reforms are slower than necessary and reform of land markets are connected to questions of reforming agriculture.
Since GST has been mentioned, one should mention direct tax reform (on the pending agenda) and non-tax revenue, through monetisation of assets. There is also the question of public expenditure reform, some on the pending agenda and the rest the domain of states. One should, however, mention that the Union government has not deviated from fiscal consolidation objectives. Nor has it deviated from fiscal devolution mandated by 14th and 15th Finance Commissions.
While the present increase in inflation has exogenous causes, that’s the reason inflation has been under control since May 2014, a fact often not adequately appreciated. I look at these eight years as work in progress, not work completed. Indeed, the broad reform agenda sets the template for India in the next 25 years, for 2047 or 2050. The two exogenous shocks during the second term were aberrations, requiring deviations from the higher growth and development trajectory. Once the uncertainty eases, the country will move back to that growth path.
The author is the chairman of the Prime Minister’s Economic Council and a well-known Sanskrit scholar. The views expressed are personal.
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